Electronic health information and privacy

July 02, 2010

Athenahealth Paying Dearly to Take on Larger Rivals

Athenahealth is a high-flier in the Boston business community, led by the outspoken and forceful Jonathan Bush.

Bush, however, openly admits that his Watertown, MA-based company (NASDAQ:ATHN) is relatively unknown outside of local business and technology circles---including among most U.S. physicians.

Athena has been ramping up efforts to raise its profile among doctors, the target audience for its Internet-enabled billing and electronic health records services.

About 16,400 physicians currently use Athena's Internet software and services to manage their billing, and a goal of the company's marketing is to grow its customer base to 100,000 doctors.

To reach that target number, Athena is spending money on measures to get doctors to warm up to the firm's relatively new concept of charging customers at a rate that fluctuates depending on how well its billing system performs for them.

Doctors are notoriously hesitant to adopt new technologies like Athena's.

Also, the company will have trouble matching the marketing might of its larger competitors such as GE Healthcare, Allscripts-Misys Healthcare, and Siemens Medical Solutions.

Allscripts, for example, has about 10 times as many physician customers as Athena and more salespeople beating the pavement to grow that user base further still, says George Hill, an analyst for Leerink Swann, a Boston-based investment bank and equities research firm.

Another challenge for Athena, he adds, is to convince larger medical provider organizations to agree to the same pricing structures that the company has been able to use with small- and mid-sized doctors practices.

Athena typically charges its customers between 4 and 8 percent of their billing revenue, he says, depending on the number of services a customer is getting from the company.

Athena is in a race with competitors to grow its tiny share of the electronic health records market.

As part of federal stimulus passed last year, the U. S. government plans to spend $17 billion to provide Medicare and Medicaid incentives to doctors who adopt electronic health records under certain guidelines known as "Meaningful Use," beginning in 2011.

Athena launched its electronic health record (EHR) offering in late 2007 and as of March 31 had fewer than 2,000 physicians using the software to store their patients' medical information.

Still, Athena is able to get new users started on its Internet-based system quickly, in part because doctors don't have to load the software onto their own computers or train their own IT staff to maintain it, John Hallock, a company spokesman, says.

To compete with larger firms in the EHR game, Athena has been trying to allay the concerns of many physicians that they will ultimately end up losing money by deploying the records systems.

Bush says that Athena might be able to halve the amount that physicians pay to use its EHR if they participate in what is now a nascent effort at the company called "AthenaCommunity."

Athena's EHR customers who opt to share their patients' data with other providers would pay a discounted rate to use Athena's health record software.

Athena would be able to make money with the patient data by charging, say, a hospital a small fee to access a patient's insurance and medical information from Athena's network.

For a hospital's part, this might be cheaper than paying its own staff to gather a patient's information through standard intake procedures.

Hallock, Athena's spokesman, says the community is in development and is slated to launch later this year.